Credit Score: How to Improve Your Credit Score, Know More

A credit score is a number that tells lenders how likely you are to repay a loan. A good credit score is generally considered to be 750 or higher. If your credit score is low, you may have difficulty getting a loan, or you may be charged higher interest rates.

Things That Affect Your Credit Score

There are many things that can affect your credit score, including:

• Making timely payments on your loans and credit cards
• Using your credit cards responsibly
• Not taking on too much debt
• Thinking carefully before becoming a cosigner or joint account holder
• Making sure there are no errors on your credit report

How to Improve Your Credit Score

If your credit score is low, you can take steps to improve it. Here are some tips:

• Make timely payments on your loans and credit cards. This is the most important thing you can do to improve your credit score.
• Use your credit cards responsibly. Try to pay your credit card bill in full each month. If you can’t do that, make at least the minimum payment.
• Don’t take on too much debt. Taking on too much debt at once can hurt your credit score.
• Think carefully before becoming a cosigner or joint account holder. If you cosign for a loan or become a joint account holder, and the other person doesn’t pay the debt, it could hurt your credit score.
• Make sure there are no errors on your credit report. If you find any errors on your credit report, dispute them immediately.

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Special Cases

If you’ve never taken out a loan or used a credit card, you have two options for starting a credit score:

• Get a credit card from a bank and use it responsibly. Make sure you pay your credit card bill in full each month.
• Make two small fixed deposits of Rs. 10,000 each in a bank. After the fixed deposits mature, take a loan against them. As soon as you withdraw money from your fixed deposit against overdraft, your credit score will start building.

Improving Your Credit Score After Loan Settlement

If you’ve settled a loan, your credit score may have decreased. To improve it, you need to pay your due amount and close the loan. Then, get a no due payment certificate from the bank. Once the loan is closed, the word “settled” will be removed from your credit history and your credit score will be restored.

Here are some additional tips for improving your credit score:

• Keep your credit utilization ratio low. Your credit utilization ratio is the amount of credit you’re using divided by the total amount of credit you have available. A good credit utilization ratio is 30% or less.
• Open new accounts only when you need them. Opening new accounts can help your credit score, but it’s important to only do so when you need them.
• Keep your credit report accurate. Review your credit report regularly for any errors. If you find any errors, dispute them immediately.

Improving your credit score can take time and effort, but it’s worth it. A good credit score can help you qualify for loans at lower interest rates, get approved for credit cards, and rent an apartment.